CHAPTER 8 Sourcing Prospects Using Brokers Flashcards
(16 cards)
Why choose brokers as your primary sourcing method?
Brokers deal with serious sellers and provide organized information on businesses.
What are some benefits of using a business broker?
Organized information, seller commitment, emotional management, and process facilitation.
What can a broker do during the sale process?
Manage the seller, resolve disagreements, and serve as an intermediary.
Who pays the broker’s commission?
The seller.
Where can you find business brokers?
IBBA, ACG, AMAA, APMAA, Axial, industry websites, and web searches.
What should you communicate when introducing yourself to a broker?
Capital availability, urgency to buy, professionalism, and specific target criteria.
What deters brokers from working with potential buyers?
Lack of credible financing.
How can buyers stay top-of-mind with brokers?
Frequent communication and providing feedback on teasers.
What is a teaser?
A one-page summary describing a business and its high-level financials.
What’s the goal when reviewing teasers?
To filter out about 80% of them quickly.
What comes after reviewing a teaser?
Requesting the CIM (Confidential Information Memorandum).
What is a CIM?
A detailed, confidential document about a business, usually ~40 pages.
What does a CIM typically include?
Company overview, assets, customers, competitors, financials, and projections.
What should you assume about the information in a CIM?
Assume the positive information is accurate—then apply deeper filters.
What should you do if a business passes the CIM filters?
Contact the broker for more details or to arrange a seller interview.
In the book example, what kind of questions did Patrick and Michael prepare for sellers?
5–10 questions based on concerns from the CIM.
